Reliance records another bumper quarter with ₹10,362 crore net profit

Net profit rose to ₹10,362 crore for the quarter ended 31 March from ₹9,435 crore in the year earlier, RIL said in a statement on Thursday. That compares with the ₹9,796 crore estimated by 14 analysts surveyed by Bloomberg.

Revenue rose 19.4% to ₹1.54 trillion for the quarter ended 31 March from ₹1.29 trillion in the year earlier. Analysts estimated quarterly revenue at ₹1.48 trillion.

Revenue rose primarily on account of higher realization for refining and petrochemical products. This is the second straight quarter when the Mukesh Ambani-led company has reported a quarterly profit of more than ₹10,000 crore.

Ambani is relying on Reliance Jio and Reliance Retail to double RIL sales in about seven years and targeting that it will contribute nearly as much to the overall earnings of the company as its energy and petrochemical businesses.

RIL’s gross refining margin (GRM), or the amount a refiner earns by refining one barrel of crude oil, narrowed to a 17-quarter low at $8.2 per barrel. On a sequential basis, GRM declined 7%. It fell 25.5% from a year earlier. Analysts had expected RIL’s GRM in the range of $7-$8.5 per barrel.

During the March quarter, revenue from the refining and marketing segment fell by 6.1% to ₹87,844 crore while the segment’s operating profit declined by 25.5% to ₹4,176 crore. Refining and marketing segment performance was hurt by lower crude throughput due to planned maintenance. Revenue from petrochemicals segment increased by 11.3% to ₹42,414 crore.

“RIL reported largely in-line standalone Ebitda and higher-than-expected petchem margin at 18.9% was offset by lower-than-expected refining throughput at 16 million tonnes," said Abhijeet Bora, an analyst at Sharekhan by BNP Paribas.

RIL’s digital services businesses clocked an Ebitda (earnings before interest, tax, depreciation and amortization) of ₹4,329 crore in the March quarter.

“Now consumer businesses account for almost 25% of RIL’s Ebitda, said V. Srikanth, joint chief financial officer.

Average revenue per user (Arpu) was ₹126.2 in the March quarter, lower than the ₹128 analysts had expected. Arpu is a key measure of profitability for telecom companies.

“There are 90 days in this quarter versus 92 days in the last three quarters each, due to which we have seen a dip of 2.7% in Arpu. Also, Jio customers came in at ₹99 plan that may have impacted the Arpu," said Anshuman Thakur, Reliance Jio strategy and planning head.

The company expects Arpu to increase on the back of new schemes.

Reliance Retail saw 89% growth in revenue to ₹1.31 trillion in the March quarter from ₹69,198 crore in the year earlier. Segment operating profit rose 168% to ₹5,546 crore to ₹2,064 crore.

“There is no sign of deflation that we are seeing in our stores," said Gaurav Jain, strategy head of Reliance Retail Ltd, referring to slowing consumer demand. The company has opened 2,829 stores in the year ended 31 March and 510 stores in the fourth quarter.

RIL’s debt outstanding as on 31 March rose to ₹2.87 trillion from ₹2.18 trillion at the end of the previous year. The company held cash and cash equivalents of ₹1.33 trillion at the end of the fiscal year, compared with ₹78,063 crore as on 31 March 2018.

“During FY 2018-19, we achieved several milestones and made significant strides in building Reliance of the future. Reliance Retail crossed ₹100,000 crore revenue milestone, Reliance Jio now serves over 300 million consumers and our petrochemicals business delivered its highest ever earnings," said Mukesh Ambani, chairman and managing director, Reliance Industries Ltd.

“Reliance Jio net profit largely remained flat quarter-on-quarter at ₹840 crore and average revenue per user declined to ₹126 per subscriber per month. We believe that likely strong subscriber additions in the telecom business, sustained high growth in retail business and likely deleveraging of the consolidated balance sheet would act as key re-rating catalyst for the stock," added Bora.

On Thursday, RIL shares rose 2.79% to ₹1,382.90 apiece on the BSE while the benchmark Sensex lost 0.34% to end the day at 39,140.28 points.